Collaboration as the Tool Assisting in Dealing with Challenges Resulting from Shrinking Product Life Cycles
The increasingly fast pace, at which the process of the product lifecycle (PLC) shrinking occurs, can be viewed as the defining characteristic feature of the 21st-century economy. Typically defined as the set of stages that a product undergoes from the moment when it is created to the point at which it is disposed of, it clearly tends to become shorter nowadays (Bansal & Singla 2013).
The rapid decrease in the lifecycle of a number of products that can be witnessed in the global market nowadays can be attributed to a range of factors, the quality of the goods and the abundance of their substitutes being the key reason. According to recent researches, the phenomenon under analysis occurs due to the poor communication between the partners stemming from the improper management of the supply chain. The latter is impacted by the lack of communication and the mismanagement of information resulting from the lack of trust and the firm’s unwillingness to share its data with its partners, especially with suppliers.
For instance, the study carried out by the Europe Shrinkage Group (2013) shows that the lack of cooperation between partners affects a range of the elements of the supply chain significantly, therefore, leading to a massive drop in the quality rates of the products issued by a company. As a result, the life cycle of the products created in the environment, where little to no information regarding the firm’s processes, values, and ethics is shared.
Herein the need to introduce changes into the current concept of supply chain management lies. Studies show that the awareness regarding the specifics of every product released by an organization is essential for increasing the PLC (Fillard et al. 2012). For instance, the leaders of Toyota and Honda were initially against the idea of sharing every single detail of their operations with their partners, providing the latter only with rather scarce and basic information concerning their products (Fillard et al. 2012).
As a result, the lifecycle of the vehicles created by the organizations shrunk significantly, which led the leaders to rethink their current strategy concerning collaboration. As a result, the modern supply chain of both companies is represented by a collaborative approach of working with suppliers. As a result, the firms in question have obtained a better position in the global market and enhanced productivity, an impressive update on the product quality, a drop in product costs, and a strong partnership with the suppliers. For instance, Honda has launched a series of successful products since then, which can be graphic evidence in favor of collaboration and data sharing:
The program is a hands-on venture that lasts 13 weeks and has been successful in over 120 projects. Its aim is to improve productivity within the supplier’s operations. However, the primary driver of success in these projects is not engineering know-how provided by the Honda group, but communication between the company and suppliers. (Fillard et al. 2012, par. 10)
Researches point to the fact that product lifecycle shrinkage can only be addressed with the reconsideration of the current quality standards and the development of the goods that will not only hold up to the customers’ demands but also stand out of a range of similar products created by inferior companies (Gupta 2015). In other words, it is essential that firms should put a very strong emphasis on the aspects of their operations such as the research and development activities, the study of the target market, etc. However, further consideration of the subject matter will reveal that the significance of improving relationships with suppliers and, therefore, updating the supply chain management strategy is also an inevitable step to make.
The significance of suppliers and, therefore, the development of trustworthy relationships with them can be viewed as a partially technology-inhibited factor. The emergence of the so-called Big Data has led to the necessity to cooperate with partners to make sure that every single piece of information should not escape the attention of the company analysts: “Companies are relying on third party solutions and service providers to deal with Big Data” (Gupta 2015, p. 38). Hence, it is imperative that collaboration should be introduced into the process of short lifecycles increase.
Defining Real Competition Agents in the Contemporary Market: Supply Chains, Not Companies
The issue of increasing competition rates in the realm of the global market seems to have become a notorious problem for any organization entering the target area. However, despite being a rather popular topic for discussion, the concept of competition in the global market is known for a large number of misconceptions and myths floating around it. For instance, it is a popular belief that the subject matter is fueled primarily by different companies operating in the global economy, whereas, in fact, these are the supply chains that compete.
The mistake above is, in fact, quite understandable, as people rarely view the global economy in the grand scheme of events and, instead, focus on the operations of separate companies. However, attaining success in the global market presupposes that the cooperation between the members of a certain supply chain should occur; unless the necessary information flows from one member of the SCM to another one, a firm is unlikely to meet the current demands and provide the goods that meet the highest quality standards set in the industry.
For instance, the case of Microsoft can be viewed as a graphic example of supply chains competing against each other instead of the actual organizations facing each other in the environment of the global economy. According to recent reports, the entrepreneurship has been developing its supply chain consistently so that it could be represented in the global market properly (The supply chain challenge 2016).
Moreover, the competition between supply chains as opposed to a rivalry between companies can be proven by the fact that the phenomenon of sustainable supply chains has been designed recently to represent the components of integrated structures that supply chains are. In fact, the very phenomenon of rivalry on the supply chain level has been discovered recently with the following suggestion of sustainable supply management chains (SSMC) as the solution to the problem regarding the inadequate use of resources: “a sectorial snapshot is required for the proposition of further applications in leading supply chains or for spreading sector-specific practices to competing for supply chains” (Turker & Altuntas 2014, p. 838).
The case of Apple, Inc., can also be used to demonstrate the importance of the use of supply chains as active competitors as opposed to the role of single companies. A closer look at the subject matter will show that the competitiveness of the entrepreneurship is represented on a range of different levels that its supply chain consists of. For instance, the managers at Apple, Inc. put a very strong emphasis on the efficacy of its suppliers along with the performance of the entrepreneurship: “This company not only beats its rivals by the agility of its network and quality of its devices but also tries to supply them as heap as possible by having an efficient network structure” (Farahani et al. 2014, pp. 19-20).
In other words, the firm apparently puts rather high stakes on the quality of communication with its suppliers and the timely delivery of the end products, therefore, making sure that its supply chain should be competitive in the global environment.
Similarly, the Perdue Farms and the Tyson Foods Organizations have been reinforcing the overall strength of its supply chain as opposed to enhancing its own brand. The resulting increase in the efficacy of its suppliers, the quality of the procurement process, and the success of the choice of logistics tools has led to an impressively high competitiveness rate of its supply chain in the global market: “Vertical integration has also been adopted by “Perdue Farms” and “Tyson Foods” to make their SCNs to compete in the poultry market. These two SCs compete on their brands, quality chicken products and fresh products” (Farahani et al. 2014, p. 19).
Therefore, these are not separate companies but the entities created by them and known as supply chains that should be viewed as the key agents of the global economy. Consequently, it is legitimate to assume that competition occurs between the above-mentioned agents and not single organizations. Thus, it is reasonable to believe that the competitiveness of global companies hinges on the efficacy of their supply chains, particularly, the sustainability thereof. It is the speed of the products and raw materials delivery (i.e., the logistics processes) and the quality of the end product that defines the competitiveness of entrepreneurship in the global market realm.
To be efficient in the designated market, firms have to be huge entities instead of weak one-company systems. Therefore, the reinforcement of global supply chain competitiveness seems to be the most logical step to make.
Challenges Faced By SMEs When Forming Partnership with Larger Firms Across Supply Chains
The significance of creating strong cooperation with partners to build a well-developed and productive supply chain is doubtless; however, to create a successful partnership and promote trust among the parties involved, a firm must make an effort in overcoming a range of obstacles, including economic, financial, political, legal, and technological ones.
The problem regarding the management of Big Data deserves to be brought up first as one of the most notorious issues. Operating in the global economy realm means being able to manage the so-called Big Data, i.e., the pieces of information that are located outside of the company’s reach. Apart from being rather hard to obtain, the data in question needs to be processed carefully and transferred properly so that every single member of the supply chain could receive it. In other words, it is the choice of a proper information management strategy that defines the success of entrepreneurship in the environment of the global economy.
At this point, the importance of adopting the latest IT advances to facilitate data transfer and safety deserves to be brought up. Indeed, the threat of cyberattacks remains a part and parcel of the target environment; thus, there is a strong need to make certain that the cybersecurity of a company should be maintained at a consistently high level. The above-mentioned issue begs the question of whether the cooperation with Big Data processing companies such as Arcadia Data, Data Hero, etc. (Brown 2015, par. 2–4) should be viewed as a necessity for a supply chain working in the global market.
In addition, the issue regarding the data quality needs to be addressed when building a sustainable and competitive supply chain. Although an organization needs to process an immensely big amount of information to gain a competitive advantage, the percentage of the actual valuable information is likely to be upsettingly small. For a supply chain created by several companies to succeed in the global market, it is imperative to make sure that proper tools for managing the data flow are incorporated into the framework.
Another challenge that large organizations are likely to face when forming a collaboration with each other in an endeavor to create a strong supply chain, the lack of foundation for developing a common platform needs to be addressed. For instance, the recent split between Volkswagen and Suzuki shows that the lack of motivation and the unwillingness of the parties involved to compromise leads to an inevitable failure (Harner 2011). Furthermore, the reunion that the companies agreed on in 2015 (Suzuki buys back VW stake after bitter split 2015) showed that both organizations realized the significance of a compromise and the proper communication process in the realm of the global economy.
The necessity to develop impressive flexibility falls under the category of the most difficult challenges to face when forming a partnership with a different company in the global economic environment. There is no secret that operating in the target area requires having a rigid set of rules, a clear mission and a vision statement, and a clear strategy that an organization is supposed to follow. Therefore, when two businesses with different missions and visions attempt at cooperation, a rough start can be expected unless the leaders familiarize themselves with each other’s policies, goals, and strategies. Moreover, when starting a partnership, the firms above will have to develop the common grounds that will, later on, serve as the foundation for conflicts-solving and trust-developing exercises.
Last but definitely not least, honesty and transparency must become the key to the communication process between the parties involved, which might be a challenge given the possibility of corporate fraud. As the research carried out for CISCO shows, transparency between the agents of a supply chain leads to the further promotion of sustainability and the improvement of a firm’s competitiveness: “To consider Cisco a truly sustainable company, our customers, investors, and partners want to make sure our commitment to the environment, people, and communities is shared by our supply chain partners” (Case study: promoting supply chain transparency 2015, par. 2). Therefore, transparency and clarity should also be included in the set of strategies used by supply chain managers when forming a partnership.
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